Brimley Corp. issued 5,000 common shares, no par, and 800 preferred shares

| June 14, 2018


1) Brimley Corp. issued 5,000 common shares, no par, and 800 preferred shares. At the time of issue
the common shares were selling at $30 per share and the preferred at $25. Total cash received was
1. Prepare the journal entry to record the issuance of the shares. (show work)

2) Tom began working for Zenon Corporation at age 40 and immediately qualified for the company
pension plan. Tom retired at the age of 65, after 25 years of service. The pension provided Tom with a
$35,000 annual pension, to be paid at year-end, for 15 years. Assume a constant interest rate of 8%
during Tom’s 25 working years and 7% since Tom’s retirement, per actuarial estimates. Zenon
Corporation funds their pension using a constant amount at the end of each year during the
employment period.

What type of pension plan does Zenon Corporation maintain for their employees? (2 marks)
To fund Tom’s pension, how much should Zenon Corporation have in their pension fund at
the beginning of Tom’s first year of retirement? (6 marks) (show work)
How much should Zenon pay to the funding trustee each year-end during Tom’s 25 year
employment period to fully fund Tom’s pension obligation? (6 marks) (show work)
Given the data provided, is it possible to calculate the pension expense for all retired
employees at Zenon Corporation for the first year of Tom’s retirement? If yes, calculate the
pension expense amount. If no, explain why it is not possible. (6 marks) (show work)


The following data pertains to a defined benefit (DB) pension plan:

defined benefit obligation, December 31, 2015


long-term interest rate on corporate bonds


past service cost, December 31, 2016, benefits and liability reduced


actuarial revaluation, December 31, 2016, change in
mortality assumptions, increased liability


actual return on plan assets – 2016


fair value of plan assets, December 31, 2015


funding payment at December 31, 2016


benefits paid to retirees – 2016


current service cost – 2016



Calculate the net defined benefit pension asset/liability at December 31, 2015. (6 marks)
(show work)
For December 31, 2016, calculate the defined benefit obligation, fair value of plan assets and
the net defined benefit pension asset or liability. (8 marks) (show work)
Calculate the three pension accounting elements and journal entries for service cost, net
interest and revaluations for 2016. (6 marks) (show work)

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